Invesco V.I. Balanced-Risk Allocation Fund

The Fund provides a complete list of its holdings four times in each fiscal year, atthe quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The Fund’s Form N-Q filings are available on the SEC website, sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the PublicReference Room, including information about duplicating fee charges, by calling202 551 8090 or 800 732 0330, or by electronic request at the following emailaddress: [email protected]. The SEC file numbers for the Fund are 811-07452 and 033-57340. The Fund’s most recent portfolio holdings, as filed on Form N-Q, have also been made available to insurance companies issuing variable annuity contractsand variable life insurance policies (“variable products”) that invest in the Fund.

A description of the policies and procedures that the Fund uses to determine how tovote proxies relating to portfolio securities is available without charge, upon request, fromour Client Services department at 800 959 4246 or at invesco.com/proxyguidelines.The information is also available on the SEC website, sec.gov.

Information regarding how the Fund voted proxies related to its portfolio securitiesduring the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.

Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services toindividual and institutional clients and does not sell securities. Invesco Distributors, Inc. is theUS distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.

This report must be accompanied or preceded by a currently effective Fundprospectus and variable product prospectus, which contain more completeinformation, including sales charges and expenses. Investors should read eachcarefully before investing.

Annual Report to Shareholders December 31, 2017

Invesco V.I. Balanced-Risk Allocation Fund

Invesco Distributors, Inc. VIIBRA-AR-1 02142018 1346


Market conditions and your FundFor the year ended December 31, 2017, each of the asset classes in which theFund invests (directly or indirectly through derivatives) provided positive contributions to Fund performance — and the Fund reported positive absolute per-formance. The Fund invests in deriva-tives, such as swaps and futures, which are expected to correspond to the perfor-mance of US and international fixed in-come, equity and commodity markets.The strategic allocation portion of the in-vestment process involves first selecting representative assets for each asset classfrom a universe of more than 50 assets.Next, we seek to construct the portfolioso that an approximately equal amount of risk comes from our equity, fixed in-come and commodity allocations. Tacti-cal adjustments to the Fund’s portfolioare then made on a monthly basis to tryand take advantage of short-term market dynamics, while remaining consistentwith the balanced-risk long-term portfoliostructure.

The Fund’s strategic exposure to equi-ties, obtained through the use of swaps and futures, led results for the reporting period, with all six markets in which theFund invests — Europe ex-UK, Hong Kong,

Japan, the UK, US large caps and USsmall caps — posting positive returns.Asian equities were the leading contribu-tor to Fund performance as Japanese eq-uity prices were boosted by increased ex-ports. Hong Kong equities provided further positive influence from the Asianregion, rising in sympathy with emerging markets, which enjoyed a substantial ral-ly. While the prospect of less accommo-dative monetary policy from the Europe-an Central Bank (ECB) and Brexit (the UK’s plan to leave the European Union) remained sources of political and eco-nomic uncertainty, European and UK eq-uities performed strongly due to im-proved economic data and positive confidence surveys. US equities (both large- and small-caps) also contributed to the Fund’s performance. The reporting period began with most major US stockmarket indexes hitting record highs fol-lowing the US presidential election. Inves-tors believed the new administration’splans to reduce tax rates, scale back reg-ulations and increase infrastructurespending had the potential to stimulateeconomic growth. That was called intoquestion after the first quarter of 2017,when it appeared that enacting signifi-cant regulatory and tax reform might be

more difficult than previously anticipated— although in December 2017, major taxreform legislation was enacted into law. Tactical positioning in US equities, ob-tained through the use of swaps and fu-tures, contributed to Fund performance for the reporting period as overweight exposure to the asset class provedtimely.

The Fund’s exposure to commodities,obtained through the use of swaps, fu-tures and commodity-linked notes, alsocontributed to Fund performance for the year, as gains in industrial metals, energy and precious metals outweighed losses inagriculture. Strategic positioning in in-dustrial metals was the leading performerwithin the asset class, with gains in bothaluminum and copper. Increased industri-al metals prices were supported by strongmanufacturing and import growth data out of China and by indications that China intended to cut production to curb pollu-tion. The Fund’s strategic positioningwithin energy was also favorable as all as-sets, with the exception of natural gas,experienced gains. The energy commod-ity sector started the year plagued by high inventory levels and rising US pro-duction and rig counts. These conditionslasted throughout much of the first half of 2017. Oil and distillate prices rebound-ed in the third quarter of 2017 as the US rig count declined and expectations rosefor an extension of OPEC’s production cuts. Severe weather also affected ener-gy prices in the third quarter of 2017 as hurricanes forced refinery shutdowns that further boosted prices. Natural gas prices rose at the beginning of the year,but those gains were not enough to out-weigh the losses from rising US output atthe end of the year. Strategic positioning in precious metals contributed to Fundperformance with gains in gold outweigh-ing losses in silver. Precious metals were pressured as the US Federal Reserve raised short-term interest rates three

Management’s Discussion of Fund Performance

Performance summaryFor the year ended December 31, 2017, Series I shares of Invesco V.I. Balanced-Risk Allocation Fund (the Fund) underperformed the Custom Invesco V.I. Balanced-Risk Allocation Index, the Fund’s custom style-specific index.

Your Fund’s long-term performance appears later in this report.

Fund vs. IndexesTotal returns, 12/31/16 to 12/31/17, excluding variable product issuer charges.If variable product issuer charges were included, returns would be lower.

Series I Shares 10.16%Series II Shares 9.83MSCI World Index (Broad Market Index) 22.40Custom Invesco V.I. Balanced-Risk Allocation Index (Style-Specific Index) 14.54Lipper VUF Absolute Return Funds Classification Average (Peer Group) 5.28Source(s): FactSet Research Systems Inc.; Invesco, FactSet Research Systems Inc.; Lipper Inc.

Target Risk Allocation andNotional Asset Weights as of 12/31/17By asset class

Asset ClassTarget RiskAllocation*

Notional Asset Weights**

Equities 43.91% 42.61%Fixed Income 19.79 62.19Commodities 36.30 36.24Total 100.00 141.04

Total Net Assets $1.2 billion*Reflects the risk that each asset class is expectedto contribute to the overall risk of the Fund asmeasured by standard deviation and estimates of risk based on historical data. Standard deviationmeasures the annualized fluctuations (volatility)of monthly returns.

**Proprietary models determine the Notional AssetWeights necessary to achieve the Target RiskAllocations. Total Notional Asset Weight greater than 100% is achieved through derivatives andother instruments that create leverage.


times during the year — in March, June and December. Strategic positioning inagriculture was the sole detractor withinthe sector. Most agriculture assets post-ed losses except cotton, lean hogs andlive cattle. Lean hogs and live cattle rosedue to strong US export demand. Sugar was by far the leading detractor from Fund performance as production in-creased despite softer global demand. Tactical positioning within commodities, obtained through the use of futures, swaps and commodity-linked notes, slightly detracted from Fund results for the reporting period.

The Fund’s exposure to global govern-ment bonds, obtained through the use of swaps and futures, contributed to resultsfor the reporting period led by Australia and the US. Despite expectations that theECB would likely begin tapering its mon-etary policy accommodation, Germangovernment bonds also contributed toFund performance. Canadian govern-ment bonds were the largest detractorwithin the fixed income asset class asyields rose after the Central Bank of Can-ada raised rates in July. Yields spiked again in the third quarter of 2017 in re-sponse to a surprise rate hike by the Cen-tral Bank of Canada. UK bonds detracted as they continued to be consumed withBrexit and terrorism. The Fund’s tacticalpositioning within bonds detracted fromperformance as losses from overweightexposure to Canadian and UK govern-ment bonds, coupled with underweight exposure to German government bonds, outweighed gains from underweight ex-posure to Australian and US government bonds.

Please note that our strategy is princi-pally implemented with derivative instru-ments that include futures, commodity-linked notes and total return swaps. Therefore, all or most of the performanceof the strategy, both positive and nega-tive, can be attributed to these instru-ments. Derivatives can be a cost-effectiveway to gain exposure to asset classes.However, derivatives may amplify tradi-tional investment risks through the cre-ation of leverage and may be less liquid than traditional securities.

Thank you for your continued invest-ment in Invesco V.I. Balanced-Risk Alloca-tion Fund.

The views and opinions expressed in management’sdiscussion of Fund performance are those of InvescoAdvisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views andopinions may not be relied upon as investmentadvice or recommendations, or as an offer for a particular security. The information is not a completeanalysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but InvescoAdvisers, Inc. makes no representation or warranty as to their completeness or accuracy. Althoughhistorical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.

See important Fund and, if applicable, index disclosures later in this report.

Mark AhnrudChartered Financial Analyst, Portfolio Manager, is manager of Invesco V.I. Balanced-Risk Allocation Fund. He joined Invesco in

2000. Mr. Ahnrud earned a BS in finance and investments from Babson College andan MBA from Duke University Fuqua School of Business.

Chris DevineChartered Financial Analyst, Portfolio Manager, is manager of Invesco V.I. Balanced-Risk Allocation Fund. He joined Invesco in

1998. Mr. Devine earned a BA in economics from Wake Forest Universityand an MBA from the University ofGeorgia.

Scott HixonChartered Financial Analyst, Portfolio Manager, is manager of Invesco V.I. Balanced-Risk Allocation Fund. He joined Invesco in

1994. Mr. Hixon earned a BBA in financefrom Georgia Southern University and anMBA in finance from Georgia StateUniversity.

Christian UlrichChartered Financial Analyst, Portfolio Manager, is manager of Invesco V.I. Balanced-Risk Allocation Fund. He joined Invesco in

2000. Mr. Ulrich earned the equivalent ofa BBA from the KV Zurich Business Schoolin Zurich, Switzerland.

Scott WolleChartered Financial Analyst, Portfolio Manager, is manager of Invesco V.I. Balanced-Risk Allocation Fund. He joined Invesco in

1999. Mr. Wolle earned a BS in financefrom Virginia Polytechnic Institute andState University and an MBA from Duke University Fuqua School of Business.

Assisted by Invesco’s Global AssetAllocation Team


Your Fund’s Long-Term Performance

Past performance cannot guarantee comparable future results.Due to changes within the Lipper VUF Absolute Returns Funds Classification Average, certain components do not have 10 years

of historical data. As such, the benchmark has not been included within the chart above.

Results of a $10,000 Investment — Oldest Share Class(es) since InceptionFund and index data from 1/23/09

1 Source: FactSet Research Systems Inc.2 Source(s): Invesco, FactSet Research Systems Inc.

$30,708 MSCI World Index1

$23,134 Custom Invesco V.I. Balanced-Risk Allocation Index2

$21,965 Invesco V.I. Balanced-Risk Allocation Fund—Series I Shares

$21,474 Invesco V.I. Balanced-Risk Allocation Fund—Series II Shares

5,000

10,000

15,000

20,000

25,000

30,000

$35,000

12/1712/1612/1512/1412/1312/1212/1112/1012/091/23/09

The returns shown above include the returns of Invesco Van Kampen V.I. Global Tactical Asset Allocation Fund (the first predecessor fund) for theperiod June 1, 2010, to May 2, 2011,the date the first predecessor fund was reorganized into the Fund, and the returns of Van Kampen Life Investment Trust Global Tactical Asset AllocationPortfolio (the second predecessor fund)for the period prior to June 1, 2010, the date the second predecessor fund was reorganized into the first predecessorfund. The second predecessor fund was advised by Van Kampen Asset Manage-ment. Returns shown above for Series Iand Series II shares are blended returnsof the predecessor funds and Invesco V.I. Balanced-Risk Allocation Fund. Share class returns will differ from thepredecessor funds because of differentexpenses.

The performance data quoted repre-sent past performance and cannot guarantee comparable future results;current performance may be lower or higher. Please contact your variable product issuer or financial adviser for themost recent month-end variable product performance. Performance figuresreflect Fund expenses, reinvested distributions and changes in net asset value. Investment return and principalvalue will fluctuate so that you may havea gain or loss when you sell shares.

The net annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Series I and Series II shares was 0.80% and 1.05%, respec-tively.1,2,3 The total annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Series I and Series II shares was 1.25% and 1.50%, respectively.1 The expense ratios presented above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the periodcovered by this report.

Invesco V.I. Balanced-Risk Alloca-tion Fund, a series portfolio of AIMVariable Insurance Funds (Invesco Variable Insurance Funds), is currently offered through insurance companiesissuing variable products. You cannot purchase shares of the Fund directly.

Performance figures given represent the Fund and are not intended to reflectactual variable product values. They do not reflect sales charges, expenses and fees assessed in connection with a variable product. Sales charges, expenses and fees, which are deter-mined by the variable product issuers,will vary and will lower the total return.

The most recent month-end perfor-mance at the Fund level, excluding variable product charges, is availableat 800 451 4246. As mentioned above, for the most recent month-end perfor-mance including variable product charges, please contact your variable product issuer or financial adviser.

Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser notwaived fees and/or reimbursed expens-es currently or in the past, returns would have been lower. See current prospectus for more information.1 The expense ratio includes acquired fund fees

and expenses of the underlying funds in which the Fund invests of 0.13%.

2 Total annual Fund operating expenses after any contractual fee waivers and/or expense reim-bursements by the adviser in effect through at least April 30, 2019. See current prospectus formore information.

3 Total annual Fund operating expenses after any contractual fee waivers by the adviser in effect through at least June 30, 2019. See currentprospectus for more information.

Average Annual Total ReturnsAs of 12/31/17

Series I SharesInception (1/23/09) 9.20%

5 Years 4.901 Year 10.16

Series II SharesInception (1/23/09) 8.93%

5 Years 4.651 Year 9.83


Invesco V.I. Balanced-Risk Allocation Fund’s investment objective is total return with a low to moderate correlation to traditional financial market indices.• Unless otherwise stated, information presented in this report is as of December 31, 2017, and is based on total net assets. • Unless otherwise noted, all data provided by Invesco.

Principal risks of investingin the FundChanging fixed income market conditionsrisk. The current low interest rate environ-ment was created in part by the Federal Reserve Board (FRB) and certain foreign central banks keeping the federal funds and equivalent foreign rates near, at or be-low zero. Increases in the federal funds andequivalent foreign rates may expose fixed income markets to heightened volatilityand reduced liquidity for certain fixed in-come investments, particularly those withlonger maturities. In addition, decreases infixed income dealer market-making capac-ity may also potentially lead to heightenedvolatility and reduced liquidity in the fixed income markets. As a result, the value ofthe Fund’s investments and share price may decline. Changes in central bank poli-cies could also result in higher than normalshareholder redemptions, which could po-tentially increase portfolio turnover andthe Fund’s transaction costs.

Commodities tax risk. The tax treatment of commodity-linked derivative instru-ments may be adversely affected by changes in legislation, regulations or otherlegally binding authority. If, as a result of any such adverse action, the income ofthe Fund from certain commodity-linked derivatives was treated as non-qualifying income, the Fund might fail to qualify as a regulated investment company and be subject to federal income tax at the Fundlevel. As a result of a recent announce-ment by the Internal Revenue Service, theFund intends to invest in commodity-linked notes: (a) directly, generally only to the ex-tent that it obtains an opinion of counselconfirming that income from such invest-ments should be qualifying income be-cause such commodity-linked notes con-stitute securities under section 2(a)(36) ofthe 1940 Act or (b) indirectly through the Subsidiary. Should the Internal Revenue Service issue further guidance, or Con-gress enact legislation, that adversely af-fects the tax treatment of the Fund’s useof commodity-linked notes or the Subsid-iary (which guidance might be applied to the Fund retroactively), it could, among other consequences, limit the Fund’s abil-ity to pursue its investment strategy.

Commodity-linked notes risk. In additionto risks associated with the underlyingcommodities, investments in commodity-

linked notes may be subject to additionalrisks, such as non-payment of interest and loss of principal, counterparty risk, lack of a secondary market and risk of greater volatility than traditional equityand debt securities. The value of the com-modity-linked notes the Fund buys may fluctuate significantly because the valuesof the underlying investments to whichthey are linked are themselves volatile.Additionally, certain commodity-linkednotes employ “economic” leverage by re-quiring payment by the issuer of an amount that is a multiple of the price in-crease or decrease of the underlying com-modity, commodity index, or other eco-nomic variable. Such economic leveragewill increase the volatility of the value of these commodity-linked notes and theFund to the extent it invests in such notes.

Commodity risk. The Fund may have in-vestment exposure to the commodities markets and/or a particular sector of the commodities markets, which may subjectthe Fund to greater volatility than invest-ments in traditional securities, such asstocks and bonds. Volatility in the com-modities markets may be caused by changes in overall market movements,domestic and foreign political and eco-nomic events and policies, war, acts ofterrorism, changes in domestic or foreigninterest rates and/or investor expecta-tions concerning interest rates, domesticand foreign inflation rates, investmentand trading activities of mutual funds, hedge funds and commodities funds, and factors such as drought, floods, weather, livestock disease, embargoes, tariffs andother regulatory developments or supply and demand disruptions. Because the Fund’s performance may be linked to the performance of volatile commodities, in-vestors should be willing to assume therisks of potentially significant fluctuationsin the value of the Fund’s shares.

Correlation risk. Because the Fund’s in-vestment strategy seeks to balance riskacross three asset classes and, withineach asset class, across different coun-tries and investments, to the extent either the asset classes or the selected countries and investments become correlated in away not anticipated by the Adviser, the Fund’s risk allocation process may resultin magnified risks and loss instead of bal-ancing (reducing) the risk of loss.

Debt securities risk. The prices of debt securities held by the Fund will be affect-ed by changes in interest rates, the cred-itworthiness of the issuer and other fac-tors. An increase in prevailing interestrates typically causes the value of existingdebt securities to fall and often has agreater impact on longer-duration debt securities and higher quality debt securi-ties. Falling interest rates will cause theFund to reinvest the proceeds of debt se-curities that have been repaid by the issu-er at lower interest rates. Falling interest rates may also reduce the Fund’s distrib-utable income because interest paymentson floating rate debt instruments held by the Fund will decline. The Fund could losemoney on investments in debt securitiesif the issuer or borrower fails to meet its obligations to make interest paymentsand/or to repay principal in a timely man-ner. Changes in an issuer’s financial strength, the market’s perception of suchstrength or in the credit rating of the issu-er or the security may affect the value ofdebt securities. The Adviser’s credit anal-ysis may fail to anticipate such changes,which could result in buying a debt secu-rity at an inopportune time or failing tosell a debt security in advance of a pricedecline or other credit event.

Derivatives risk. The value of a deriva-tive instrument depends largely on (and isderived from) the value of an underlying security, currency, commodity, interestrate, index or other asset (each referred toas an underlying asset). In addition to risks relating to the underlying assets, the useof derivatives may include other, possiblygreater, risks, including counterparty, le-verage and liquidity risks. Counterparty risk is the risk that the counterparty to thederivative contract will default on its obli-gation to pay the Fund the amount owed or otherwise perform under the derivativecontract. Derivatives create leverage riskbecause they do not require payment up front equal to the economic exposure cre-ated by owning the derivative. As a result, an adverse change in the value of the un-derlying asset could result in the Fund sus-taining a loss that is substantially greaterthan the amount invested in the deriva-tive, which may make the Fund’s returns more volatile and increase the risk of loss. Derivative instruments may also be lessliquid than more traditional investments


and the Fund may be unable to sell or close out its derivative positions at a desir-able time or price. This risk may be moreacute under adverse market conditions,during which the Fund may be most in need of liquidating its derivative positions.Derivatives may also be harder to value, less tax efficient and subject to changinggovernment regulation that could impactthe Fund’s ability to use certain derivativesor their cost. The SEC has proposed new regulations related to the use of deriva-tives and related instruments by regis-tered investment companies. If adopted asproposed, these regulations would limitthe Fund’s ability to engage in derivatives transactions and may result in increasedcosts or require the Fund to modify its in-vestment strategies or to liquidate. Also, derivatives used for hedging or to gain or limit exposure to a particular market seg-ment may not provide the expected ben-efits, particularly during adverse market conditions. These risks are greater for theFund than most other mutual funds be-cause the Fund will implement its invest-ment strategy primarily through derivativeinstruments rather than direct invest-ments in stocks/bonds.

Emerging markets securities risk. Emerg-ing markets (also referred to as developing markets) are generally subject to greatermarket volatility, political, social and eco-nomic instability, uncertain trading mar-kets and more governmental limitations onforeign investment than more developedmarkets. In addition, companies operating in emerging markets may be subject tolower trading volume and greater pricefluctuations than companies in more devel-oped markets. Securities law and the en-forcement of systems of taxation in manyemerging market countries may changequickly and unpredictably. In addition, in-vestments in emerging markets securities may also be subject to additional transac-tion costs, delays in settlement proce-dures, and lack of timely information.

Exchange-traded funds risk. In additionto the risks associated with the underly-ing assets held by the exchange-traded fund, investments in exchange-traded funds are subject to the following addi-tional risks: (1) an exchange-tradedfund’s shares may trade above or below its net asset value; (2) an active trading market for the exchange-traded fund’s shares may not develop or be main-tained; (3) trading an exchange-tradedfund’s shares may be halted by the listing exchange; (4) a passively managed ex-change-traded fund may not track the performance of the reference asset; and(5) a passively managed exchange-trad-

ed fund may hold troubled securities. In-vestment in exchange-traded funds may involve duplication of management feesand certain other expenses, as the Fund indirectly bears its proportionate share ofany expenses paid by the exchange-trad-ed funds in which it invests. Further, cer-tain exchange-traded funds in which the Fund may invest are leveraged, which may result in economic leverage, permit-ting the Fund to gain exposure that is greater than would be the case in an un-levered instrument and potentially result-ing in greater volatility.

Exchange-traded notes risk. Exchange-traded notes are subject to credit risk,counterparty risk, and the risk that the value of the exchange-traded note may drop due to a downgrade in the issuer’s credit rating. The value of an exchange-traded note may also be influenced by time to maturity, level of supply and de-mand for the exchange-traded note, vola-tility and lack of liquidity in the underlying market, changes in the applicable inter-est rates, and economic, legal, political, or geographic events that affect the ref-erenced underlying market or assets. The Fund will bear its proportionate share ofany fees and expenses borne by an ex-change-traded note in which it invests. For certain exchange-traded notes, theremay be restrictions on the Fund’s right toredeem its investment, which is meant to be held until maturity.

Foreign government debt risk. Invest-ments in foreign government debt securi-ties (sometimes referred to as sovereigndebt securities) involve certain risks inaddition to those relating to foreign secu-rities or debt securities generally. The is-suer of the debt or the governmental au-thorities that control the repayment ofthe debt may be unable or unwilling to re-pay principal or interest when due in ac-cordance with the terms of such debt,and the Fund may have limited recourse in the event of a default against the de-faulting government. Without the approv-al of debt holders, some governmentaldebtors have in the past been able to re-schedule or restructure their debt pay-ments or declare moratoria on payments.

Foreign securities risk. The Fund’s for-eign investments may be adversely af-fected by political and social instability,changes in economic or taxation policies, difficulty in enforcing obligations, de-creased liquidity or increased volatility.Foreign investments also involve the riskof the possible seizure, nationalization orexpropriation of the issuer or foreign de-posits (in which the Fund could lose itsentire investments in a certain market)

and the possible adoption of foreign gov-ernmental restrictions such as exchangecontrols. Unless the Fund has hedged itsforeign securities risk, foreign securities risk also involves the risk of negative for-eign currency rate fluctuations, whichmay cause the value of securities denom-inated in such foreign currency (or other instruments through which the Fund has exposure to foreign currencies) to declinein value. Currency exchange rates may fluctuate significantly over short periodsof time. Currency hedging strategies, if used, are not always successful.

Management risk. The Fund is actively managed and depends heavily on the Ad-viser’s judgment about markets, interestrates or the attractiveness, relative val-ues, liquidity, or potential appreciation ofparticular investments made for theFund’s portfolio. The Fund could experi-ence losses if these judgments prove tobe incorrect. Because the Fund’s invest-ment process relies heavily on its asset allocation process, market movementsthat are counter to the portfolio manag-ers’ expectations may have a significantadverse effect on the Fund’s net asset value. Additionally, legislative, regulato-ry, or tax developments may adversely affect management of the Fund and, therefore, the ability of the Fund to achieve its investment objective.

Market risk. The market values of theFund’s investments, and therefore the value of the Fund’s shares, will go up and down, sometimes rapidly or unpredict-ably. Market risk may affect a single issu-er, industry or section of the economy, orit may affect the market as a whole. Indi-vidual stock prices tend to go up and down more dramatically than those of certain other types of investments, suchas bonds. During a general downturn in the financial markets, multiple assetclasses may decline in value. When mar-kets perform well, there can be no assur-ance that specific investments held by the Fund will rise in value.

Short position risk. Because the Fund’s potential loss on a short position arises from increases in the value of the assetsold short, the Fund will incur a loss on ashort position, which is theoretically un-limited, if the price of the asset sold short increases from the short sale price. Thecounterparty to a short position or othermarket factors may prevent the Fund from closing out a short position at a de-sirable time or price and may reduce or eliminate any gain or result in a loss. In arising market, the Fund’s short positionswill cause the Fund to underperform theoverall market and its peers that do not


engage in shorting. If the Fund holds bothlong and short positions, and both posi-tions decline simultaneously, the short positions will not provide any buffer (hedge) from declines in value of the Fund’s long positions. Certain types of short positions involve leverage, whichmay exaggerate any losses, potentially more than the actual cost of the invest-ment, and will increase the volatility ofthe Fund’s returns.

Subsidiary risk. By investing in the Sub-sidiary, the Fund is indirectly exposed to risks associated with the Subsidiary’s in-vestments. The Subsidiary is not regis-tered under the Investment Company Act of 1940, as amended (1940 Act), and, except as otherwise noted in this pro-spectus, is not subject to the investorprotections of the 1940 Act. Changes inthe laws of the United States and/or theCayman Islands, under which the Fundand the Subsidiary, respectively, are or-ganized, could result in the inability of theFund and/or the Subsidiary to operate as described in this prospectus and the SAI, and could negatively affect the Fund andits shareholders.

US government obligations risk. Obliga-tions of US government agencies and au-thorities receive varying levels of supportand may not be backed by the full faithand credit of the US government, which could affect the Fund’s ability to recover should they default. No assurance can be given that the US government will pro-vide financial support to its agencies and authorities if it is not obligated by law todo so.

Volatility risk. Although the Fund’s in-vestment strategy targets a specific vola-tility level, certain of the Fund’s invest-ments may appreciate or decreasesignificantly in value over short periods oftime. This may cause the Fund’s net assetvalue per share to experience significantincreases or declines in value over shortperiods of time.

About indexes used in this report The MSCI WorldSM Index is an unmanaged xindex considered representative of stocksof developed countries. The index is com-puted using the net return, which with-holds applicable taxes for non-resident investors.

The Custom Invesco V.I. Balanced-Risk Allocation Index, created by Invesco to serve as a benchmark for Invesco V.I. Balanced-Risk Allocation Fund, comprises the following indexes:MSCI World Index (60%) and Bloomberg Barclays U.S. Aggregate Bond Index (40%). Prior to May 2, 2011, the index

comprised the MSCI World Index (65%), J.P. Morgan GBI Global Index (30%) andFTSE US 3-Month Treasury Bill Index (5%).

The Lipper VUF Absolute Return Funds Classification Average repre-sents an average of all variable insurance underlying funds in the Lipper Absolute Return Funds Classification.

The Bloomberg Barclays U.S. Aggre-gate Bond Index is an unmanaged index considered representative of the USinvestment grade, fixed-rate bond market.

The J.P. Morgan GBI Global Indextracks fixed-rate issuances from high-income countries spanning the globe.

The FTSE US 3-Month Treasury BillIndex is an unmanaged index representa-tive of three-month US Treasury bills.

The Fund is not managed to track the performance of any particular index, including the index(es) described here, and consequently, the performance of the Fund may deviate significantly from the performance of the index(es).

A direct investment cannot be made inan index. Unless otherwise indicated,index results include reinvested divi-dends, and they do not reflect sales charges. Performance of the peer group, if applicable, reflects fund expenses; per-formance of a market index does not.

Other informationThe returns shown in management’s dis-cussion of Fund performance are based on net asset values calculated for share-holder transactions. Generally acceptedaccounting principles require adjust-ments to be made to the net assets of theFund at period end for financial reporting purposes, and as such, the net asset val-ues for shareholder transactions and thereturns based on those net asset valuesmay differ from the net asset values and returns reported in the Financial High-lights. Additionally, the returns and netasset values shown throughout thisreport are at the Fund level only and do not include variable product issuercharges. If such charges were included, the total returns would be lower.

Consolidated Schedule of InvestmentsDecember 31, 2017

InterestRate

MaturityDate

PrincipalAmount Value

U.S. Treasury Bills–10.96%(a)

U.S. Treasury Bills(b) 1.12% 01/04/2018 $ 15,500,000 $ 15,499,028U.S. Treasury Bills(b) 1.02% 01/11/2018 47,200,000 47,186,166U.S. Treasury Bills 1.11% 02/08/2018 14,980,000 14,960,812U.S. Treasury Bills 1.44% 06/07/2018 54,000,000 53,657,775

Total U.S. Treasury Bills (Cost $131,309,526) 131,303,781

ExpirationDate

Commodity-Linked Securities–2.00%Canadian Imperial Bank of Commerce EMTN, U.S. Federal Funds Effective Rate minus 0.03%

(linked to the Canadian Imperial Bank of Commerce Custom 5 Agriculture CommodityIndex, multiplied by 2)(c)(g) 09/24/2018 8,850,000 9,611,802

Cargill, Inc., Commodity-Linked Notes, one month USD LIBOR minus 0.10% (linked to theMonthly Rebalance Commodity Excess Return Index, multiplied by 2)(c)(g) 08/15/2018 15,050,000 14,307,158

Total Commodity-Linked Securities (Cost $23,900,000) 23,918,960

Shares

Money Market Funds–83.92%Invesco Government & Agency Portfolio–Institutional Class, 1.18%(d) 357,347,280 357,347,280Invesco Government Money Market Fund–Cash Reserve Shares, 0.64%(d) 11,260,610 11,260,610Invesco Premier U.S. Government Money Portfolio–Institutional Class, 1.15%(d) 124,910,149 124,910,149Invesco Treasury Obligations Portfolio–Institutional Class, 1.07%(d) 186,855,744 186,855,744Invesco Treasury Portfolio–Institutional Class, 1.17%(d) 229,511,825 229,511,825Invesco V.I. Government Money Market Fund–Series I, 0.90%(d) 16,640,310 16,640,310STIC (Global Series) PLC–U.S. Dollar Liquidity Portfolio–Institutional Class (Ireland), 1.39%(d) 78,367,910 78,367,910

Total Money Market Funds (Cost $1,004,893,828) 1,004,893,828

TOTAL INVESTMENTS IN SECURITIES–96.88% (Cost $1,160,103,354) 1,160,116,569

OTHER ASSETS LESS LIABILITIES–3.12% 37,300,376

NET ASSETS–100.00% $1,197,416,945

Open Futures Contracts(e)

Long Futures ContractsNumber ofContracts

ExpirationMonth

NotionalValue Value

UnrealizedAppreciation

(Depreciation)

Brent Crude 333 March-2018 $ 22,267,710 $ 1,033,582 $ 1,033,582Gasoline Reformulated Blendstock Oxygenate Blending 470 February-2018 35,449,092 2,235,837 2,235,837Heating Oil 169 April-2018 14,292,533 2,074,091 2,074,091Silver 371 March-2018 31,803,975 (96,852) (96,852)WTI Crude 263 June-2018 15,795,780 626,274 626,274

Subtotal — Commodity Risk 5,872,932 5,872,932

Dow Jones EURO STOXX 50 Index 2,085 March-2018 87,380,294 (2,208,417) (2,208,417)E-Mini Russell 2000 Index 883 March-2018 67,836,475 868,245 868,245E-Mini S&P 500 Index 528 March-2018 70,646,400 1,176,670 1,176,670FTSE 100 Index 920 March-2018 94,870,987 2,969,523 2,969,523Hang Seng Index 388 January-2018 74,363,066 1,154,573 1,154,573Tokyo Stock Price Index 626 March-2018 100,953,404 2,426,419 2,426,419

Subtotal — Equity Risk 6,387,013 6,387,013

Australia 10 Year Bonds 1,615 March-2018 162,741,962 (1,170,994) (1,170,994)Canada 10 Year Bonds 2,120 March-2018 227,332,007 (3,002,411) (3,002,411)Euro Bonds 545 March-2018 105,721,097 (951,857) (951,857)Long Gilt 746 March-2018 126,057,973 854,542 854,542U.S. Treasury Long Bonds 711 March-2018 108,783,000 (160,637) (160,637)

Subtotal — Interest Rate Risk (4,431,357) (4,431,357)

Total Futures Contracts $ 7,828,588 $ 7,828,588

See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.


Open Over-The-Counter Total Return Swap Agreements(f)

CounterpartyPay/

Receive Reference Entity(g)FixedRate

PaymentFrequency

Number ofContracts

MaturityDate

NotionalValue(h)

UpfrontPayments

Paid(Received) Value

UnrealizedAppreciation

(Depreciation)

Barclays Bank PLCReceive

Barclays Commodity Strategy1452 Excess Return Index 0.33% Monthly 43,000 October-2018 $ 24,188,402 $— $1,280,009 $1,280,009

Barclays Bank PLCReceive

Barclays Commodity Strategy1719 Excess Return Index 0.45 Monthly 107,400 July-2018 27,289,470 — 653,164 653,164

Canadian Imperial Bank ofCommerce

Receive

Canadian Imperial Bank ofCommerce Custom 5Agriculture CommodityIndex 0.55 Monthly 310,500 July-2018 28,789,560 — 598,427 598,427

Canadian Imperial Bank ofCommerce

Receive

Canadian Imperial Bank ofCommerce Dynamic Roll LMECopper Excess ReturnIndex 2 0.30 Monthly 278,500 April-2018 23,410,292 — 2,030,822 2,030,822

Cargill, Inc.

Receive

Monthly RebalanceCommodity Excess ReturnIndex 0.47 Monthly 37,200 July-2018 30,776,416 — 0 0

Cargill, Inc.Receive

Single Commodity IndexExcess Return 0.12 Monthly 13,800 January-2018 12,520,850 — 0 0

Goldman SachsInternational

Receive

Goldman Sachs Alpha BasketB823 Excess ReturnStrategy 0.40 Monthly 339,500 July-2018 27,811,742 — 114,245 114,245

J.P. Morgan Chase Bank,N.A. Receive

J.P. Morgan Contag BetaGas Oil Excess Return Index 0.25 Monthly 63,300 April-2018 15,071,008 — 498,823 498,823

J.P. Morgan Chase Bank,N.A. Receive

S&P GSCI Gold Index ExcessReturn 0.09 Monthly 161,500 October-2018 16,761,100 — 399,761 399,761

Macquarie Bank Ltd.Receive

Macquarie AluminumDynamic Selection Index 0.30 Monthly 192,000 December-2018 10,892,544 — 832,704 832,704

Merrill Lynch InternationalReceive

Merrill Lynch Gold ExcessReturn Index 0.14 Monthly 129,000 June-2018 21,482,344 — 0 0


MLCX Aluminum AnnualExcess Return Index 0.28 Monthly 15,000 September-2018 1,881,231 — 0 0


MLCX Dynamic EnhancedCopper Excess Return Index 0.25 Monthly 2,300 September-2018 1,615,076 — 0 0


MLCX Natural Gas AnnualExcess Return Index 0.25 Monthly 217,000 November-2018 9,232,154 — 0 0

Morgan Stanley CapitalServices LLC Receive

S&P GSCI Aluminum DynamicRoll Index Excess Return 0.38 Monthly 149,500 October-2018 16,972,047 — 1,449,522 1,449,522

Subtotal — Commodity Risk — 7,857,477 7,857,477

Goldman SachsInternational Receive Hang Seng Index Futures — Monthly 106 January-2018 20,315,683 — 333,716 333,716

Subtotal — Equity Risk — 333,716 333,716

Subtotal — Appreciation — 8,191,193 8,191,193

Macquarie Bank Ltd.Receive

Macquarie CGB 10 YearIndex 0.34 Monthly 107,000 June-2018 CAD 19,108,049 — (74,084) (74,084)

Subtotal — Depreciation — Interest Rate Risk — (74,084) (74,084)

Total Swap Agreements $— $8,117,109 $8,117,109

Investments Abbreviations:

CAD – Canadian DollarCGB – Canadian Government BondsEMTN – European Medium-Term Notes

LIBOR – London Interbank Offered RateUSD – U.S. Dollar

Notes to Consolidated Schedule of Investments:(a) Securities traded on a discount basis. The interest rates shown represent the discount rates at the time of purchase by the Fund.(b) All or a portion of the value was pledged as collateral to cover margin requirements for open futures contracts. See Note 1L and Note 4.(c) Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”). The security may be

resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities atDecember 31, 2017, was $23,918,960, which represented 2.00% of the Fund’s Net Assets.

(d) The money market fund and the Fund are affiliated by having the same investment adviser. The rate shown is the 7-day SEC standardized yield as ofDecember 31, 2017.

(e) Futures contracts collateralized by $9,191,000 cash held with Goldman Sachs & Co., the futures commission merchant.(f) The Fund receives or pays payments based on any positive or negative return on the Reference Entity, respectively.(g) The table below includes additional information regarding the underlying components of certain reference entities that are not publicly available.



Reference Entity ComponentsReference Entity Underlying Components Percentage

Barclays Commodity Strategy 1452 Excess Return IndexLong Futures Contracts

Copper 100.00

Barclays Commodity Strategy 1719 Excess Return IndexLong Futures Contracts

Cocoa 0.17

Coffee ‘C’ 5.28

Corn 7.70

Cotton No. 2 18.88

Lean Hogs 0.52

Live Cattle 1.24

Soybean Meal 18.81

Soybean Oil 4.79

Soybeans 18.38

Sugar No. 11 19.42

Wheat 4.81

Total 100.00

Canadian Imperial Bank of Commerce Custom 5 AgricultureCommodity Index

Long Futures Contracts

Cocoa 0.17

Coffee ‘C’ 5.28

Corn 7.70

Cotton No. 2 18.88

Lean Hogs 0.52

Live Cattle 1.24

Soybean Meal 18.81

Soybean Oil 4.79

Soybeans 18.38

Sugar No. 11 19.42

Wheat 4.81

Total 100.00

Canadian Imperial Bank of Commerce Dynamic Roll LMECopper Excess Return Index 2

Long Futures Contracts

Copper 100.00

Monthly Rebalance Commodity Excess Return IndexLong Futures Contracts

Cocoa 0.17

Coffee ‘C’ 5.28

Corn 7.70

Cotton No. 2 18.88

Lean Hogs 0.52

Live Cattle 1.24

Soybean Meal 18.81

Soybean Oil 4.79

Soybeans 18.38

Sugar No. 11 19.42

Wheat 4.81

Total 100.00

Single Commodity Index Excess ReturnLong Futures Contracts

Gold 100.00



Reference Entity Components (Continued)Reference Entity Underlying Components Percentage

Goldman Sachs Alpha Basket B823 Excess Return StrategyLong Futures Contracts

Cocoa 0.17

Coffee ‘C’ 5.28

Corn 7.70

Cotton No. 2 18.88

Lean Hogs 0.52

Live Cattle 1.24

Soybean Meal 18.81

Soybean Oil 4.79

Soybeans 18.38

Sugar No. 11 19.42

Wheat 4.81

Total 100.00

J.P. Morgan Contag Beta Gas Oil Excess Return IndexLong Futures Contracts

Gas Oil 100.00

S&P GSCI Gold Index Excess ReturnLong Futures Contracts

Gold 100.00

Macquarie Aluminum Dynamic Selection IndexLong Futures Contracts

Aluminum 100.00

Merrill Lynch Gold Excess Return IndexLong Futures Contracts

Gold 100.00

MLCX Aluminum Annual Excess Return IndexLong Futures Contracts

Aluminum 100.00

MLCX Dynamic Enhanced Copper Excess Return IndexLong Futures Contracts

Copper 100.00

MLCX Natural Gas Annual Excess Return IndexLong Futures Contracts

Natural Gas 100.00

S&P GSCI Aluminum Dynamic Roll Index Excess ReturnLong Futures Contracts

Aluminum 100.00

Macquarie CGB 10 Year IndexLong Futures Contracts

Canada 10 Year Bonds 100.00

(h) Notional value is denominated in U.S. Dollars unless otherwise noted.



Consolidated Statement of Assetsand LiabilitiesDecember 31, 2017

Consolidated Statement ofOperationsFor the year ended December 31, 2017

Assets:

Investments in securities, at value (Cost $155,209,526) $ 155,222,741

Investments in affiliated money market funds, at valueand cost 1,004,893,828

Other investments:Variation margin receivable — futures contracts 914,195

Swaps receivable — OTC 1,133,066

Unrealized appreciation on swap agreements — OTC 8,191,193

Cash 9,932,287

Foreign currencies, at value (Cost $1,438) 1,486

Deposits with brokers:Cash collateral — futures contracts 9,191,000

Cash collateral — OTC derivatives 9,039,293

Receivable for:Fund shares sold 43,648

Dividends and interest 1,017,997

Fund expenses absorbed 4,410

Investment for trustee deferred compensation andretirement plans 105,793

Total assets 1,199,690,937

Liabilities:

Other investments:Swaps payable — OTC 608,908

Unrealized depreciation on swap agreements — OTC 74,084

Payable for:Fund shares reacquired 231,854

Accrued fees to affiliates 1,174,223

Accrued trustees’ and officers’ fees and benefits 1,228

Accrued other operating expenses 63,825

Trustee deferred compensation and retirement plans 119,870

Total liabilities 2,273,992

Net assets applicable to shares outstanding $1,197,416,945

Net assets consist of:

Shares of beneficial interest $1,088,131,232

Undistributed net investment income 6,690,148

Undistributed net realized gain 86,636,605

Net unrealized appreciation 15,958,960

$1,197,416,945

Net Assets:

Series I $ 39,340,358

Series II $1,158,076,587

Shares outstanding, no par value,with an unlimited number of shares authorized:

Series I 3,478,326

Series II 103,694,237

Series I:Net asset value and offering price per share $ 11.31

Series II:Net asset value per share $ 11.17

Investment income:

Dividends from affiliated money market funds $ 7,762,271

Interest 1,504,055

Total investment income 9,266,326

Expenses:

Advisory fees 10,822,792

Administrative services fees 2,057,695

Custodian fees 17,745

Distribution fees — Series II 2,875,453

Transfer agent fees 25,141

Trustees’ and officers’ fees and benefits 36,787

Reports to shareholders 124,095

Professional services fees 68,969

Other 16,650

Total expenses 16,045,327

Less: Fees waived (5,103,040)

Net expenses 10,942,287

Net investment income (loss) (1,675,961)

Realized and unrealized gain (loss) from:

Net realized gain (loss) from:Investment securities (6,652,593)

Foreign currencies (173,894)

Futures contracts 99,163,916

Swap agreements 9,156,992

101,494,421

Change in net unrealized appreciation (depreciation) of:Investment securities 3,268,818

Foreign currencies 473

Futures contracts (2,169,999)

Swap agreements 9,696,284

10,795,576

Net realized and unrealized gain 112,289,997

Net increase in net assets resulting from operations $110,614,036



Consolidated Statement of Changes in Net AssetsFor the years ended December 31, 2017 and 2016

2017 2016

Operations:

Net investment income (loss) $ (1,675,961) $ (5,966,345)

Net realized gain 101,494,421 110,140,284

Change in net unrealized appreciation 10,795,576 5,010,818

Net increase in net assets resulting from operations 110,614,036 109,184,757

Distributions to shareholders from net investment income:

Series I (1,508,787) (141,115)

Series ll (43,695,120) (1,965,605)

Total distributions from net investment income (45,203,907) (2,106,720)

Distributions to shareholders from net realized gains:

Series l (2,046,037) —

Series ll (62,678,695) —

Total distributions from net realized gains (64,724,732) —

Share transactions–net:

Series l 4,606,109 4,731,130

Series ll 43,872,788 70,235,119

Net increase in net assets resulting from share transactions 48,478,897 74,966,249

Net increase in net assets 49,164,294 182,044,286

Net assets:

Beginning of year 1,148,252,651 966,208,365

End of year (includes undistributed net investment income of $6,690,148 and $46,947,454, respectively) $1,197,416,945 $1,148,252,651

Notes to Consolidated Financial StatementsDecember 31, 2017

NOTE 1—Significant Accounting Policies

Invesco V.I. Balanced-Risk Allocation Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the“Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company consisting of twenty-four separate portfolios, (each constituting a “Fund”). The assets, liabilities andoperations of each portfolio are accounted for separately. Information presented in these consolidated financial statements pertains only to the Fund.Matters affecting each Fund or class will be voted on exclusively by the shareholders of such Fund or class. Current Securities and ExchangeCommission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally inaccordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.

The Fund will seek to gain exposure to the commodity markets primarily through investments in the Invesco Cayman Commodity Fund IV Ltd. (the“Subsidiary”), a wholly-owned subsidiary of the Fund organized under the laws of the Cayman Islands. The Subsidiary was organized by the Fund toinvest in commodity-linked derivatives and other securities that may provide leveraged and non-leveraged exposure to commodities. The Fund mayinvest up to 25% of its total assets in the Subsidiary.

The Fund’s investment objective is total return with a low to moderate correlation to traditional financial market indices.The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding

variable annuity contracts and variable life insurance policies (“variable products”).The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance in accordance with

Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services – Investment Companies.The following is a summary of the significant accounting policies followed by the Fund in the preparation of its consolidated financial statements.

A. Security Valuations — Securities, including restricted securities, are valued according to the following policy.Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent

pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflectappropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (forunlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individualtrading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutionalround lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices thaninstitutional round lots. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of defaultwith respect to interest and/or principal payments.


A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the closeof the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on aparticular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued basedon prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service theymay be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded.Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options notlisted on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining netasset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session ofthe New York Stock Exchange (“NYSE”).

Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day netasset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the lastsales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.

Swap agreements are fair valued using an evaluated quote, if available, provided by an independent pricing service. Evaluated quotes providedby the pricing service are valued based on a model which may include end-of-day net present values, spreads, ratings, industry, companyperformance and returns of referenced assets. Centrally cleared swap agreements are valued at the daily settlement price determined by therelevant exchange or clearinghouse.

Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates asof the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valuedat the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations maybecome unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, eventsoccur that the investment adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If theevent is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approvedby the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricingservice to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security tradesis not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is notreflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered bythe independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, AmericanDepositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes,potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively lowmarket liquidity and the potential lack of strict financial and accounting controls and standards.

Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independentsources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debtobligations, including corporate loans.

Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by orunder the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination ofa security’s fair value.

The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates riseand, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest ratesdepending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.

Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets,general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, thevalues reflected in the consolidated financial statements may materially differ from the value received upon actual sale of those investments.

B. Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains orlosses on sales are computed on the basis of specific identification of the securities sold. Interest income (net of withholding tax, if any) isrecorded on the accrual basis from settlement date. Bond premiums and discounts are amortized and/or accreted over the lives of the respectivesecurities. Pay-in-kind interest income and non-cash dividend income received in the form of securities in-lieu of cash are recorded at the fairvalue of the securities received. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date.

The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigationsettlements. Any proceeds received are included in the Consolidated Statement of Operations as realized gain (loss) for investments no longerheld and as unrealized gain (loss) for investments still held.

Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securitiespurchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized andunrealized gain (loss) from investment securities reported in the Consolidated Statement of Operations and the Consolidated Statement ofChanges in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs areincluded in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are notconsidered operating expenses and are not reflected in net investment income reported in the Consolidated Statement of Operations and theConsolidated Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment incomereported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.

The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.C. Country Determination — For the purposes of making investment selection decisions and presentation in the Consolidated Schedule of

Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors.These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in


which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well asother criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50%or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization.Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted.

D. Distributions — Distributions from net investment income and net realized capital gain, if any, are generally declared and paid to separateaccounts of participating insurance companies annually and recorded on the ex-dividend date.

E. Federal Income Taxes — The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, asamended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’staxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including netrealized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the consolidated financialstatements.

The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management hasanalyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertaintax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefitswill change materially in the next 12 months.

The Subsidiary is classified as a controlled foreign corporation under Subchapter N of the Internal Revenue Code. Therefore, the Fund isrequired to increase its taxable income by its share of the Subsidiary’s income. Net investment losses of the Subsidiary cannot be deducted by theFund in the current period nor carried forward to offset taxable income in future periods.

The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally the Fund is subject to examinations by suchtaxing authorities for up to three years after the filing of the return for the tax period.

F. Expenses — Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class arecharged to the operations of such class. All other expenses are allocated among the classes based on relative net assets.

G. Accounting Estimates — The financial statements are prepared on a consolidated basis in conformity with accounting principles generallyaccepted in the United States of America (“GAAP”), which requires management to make estimates and assumptions that affect the reportedamounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reportingperiod including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. Theaccompanying financial statements reflect the financial position of the Fund and its Subsidiary and the results of operations on a consolidatedbasis. All inter-company accounts and transactions have been eliminated in consolidation.

In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before thedate the consolidated financial statements are released to print.

H. Indemnifications — Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust, and under theSubsidiary’s organizational documents, the directors and officers of the Subsidiary, are indemnified against certain liabilities that may arise out ofthe performance of their duties to the Fund and/or the Subsidiary, respectively. Additionally, in the normal course of business, the Fund entersinto contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure underthese arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk ofmaterial loss as a result of such indemnification claims is considered remote.

I. Foreign Currency Translations — Foreign currency is valued at the close of the NYSE based on quotations posted by banks and majorcurrency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts atdate of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated inforeign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account forthe portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising fromchanges in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices oninvestments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in theConsolidated Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies,(2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between theamounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actuallyreceived or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other thaninvestments in securities at fiscal period end, resulting from changes in exchange rates.

The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, aportion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign marketsin which the Fund invests and are shown in the Consolidated Statement of Operations.

J. Forward Foreign Currency Contracts — The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt deliveryand settlement) basis, or through forward foreign currency contracts, to manage or minimize currency or exchange rate risk.

The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency inorder to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide forphysical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed uponexchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set asideliquid assets in an amount equal to the daily mark-to-market obligation for forward foreign currency contracts.

A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for anagreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlyingsecurities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts aremeasured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation)until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on thecontracts are included in the Consolidated Statement of Operations. The primary risks associated with forward foreign currency contracts include


failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be inexcess of the amounts reflected in the Consolidated Statement of Assets and Liabilities.

K. Structured Securities — The Fund may invest in structured securities. Structured securities are a type of derivative security whose value isdetermined by reference to changes in the value of underlying securities, currencies, interest rates, commodities, indices or other financialindicators (“reference instruments”). Most structured securities are fixed-income securities that have maturities of three years or less. Structuredsecurities may be positively or negatively indexed (i.e., their principal value or interest rates may increase or decrease if the underlying referenceinstrument appreciates) and may have return characteristics similar to direct investments in the underlying reference instrument.

Structured securities may entail a greater degree of market risk than other types of debt securities because the investor bears the risk of thereference instruments. In addition to the credit risk of structured securities and the normal risks of price changes in response to changes ininterest rates, the principal amount of structured notes or indexed securities may decrease as a result of changes in the value of the underlyingreference instruments. Changes in the daily value of structured securities are recorded as unrealized gains (losses) in the Consolidated Statementof Operations. When the structured securities mature or are sold, the Fund recognizes a realized gain (loss) on the Consolidated Statement ofOperations.

L. Futures Contracts — The Fund may enter into futures contracts to equitize the Fund’s cash holdings or to manage exposure to interest rate,equity, commodity and market price movements and/or currency risks. A futures contract is an agreement between Counterparties to purchase orsell a specified underlying security, currency or commodity (or delivery of a cash settlement price, in the case of an index future) for a fixed priceat a future date. The Fund currently invests only in exchange-traded futures and they are standardized as to maturity date and underlyingfinancial instrument. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities orcash as collateral at the futures commission merchant (broker). During the period the futures contracts are open, changes in the value of thecontracts are recognized as unrealized gains or losses by recalculating the value of the contracts on a daily basis. Subsequent or variation marginpayments are received or made depending upon whether unrealized gains or losses are incurred. These amounts are reflected as receivables orpayables on the Consolidated Statement of Assets and Liabilities. When the contracts are closed or expire, the Fund recognizes a realized gain orloss equal to the difference between the proceeds from, or cost of, the closing transaction and the Fund’s basis in the contract. The net realizedgain (loss) and the change in unrealized gain (loss) on futures contracts held during the period is included on the Consolidated Statement ofOperations. The primary risks associated with futures contracts are market risk and the absence of a liquid secondary market. If the Fund wereunable to liquidate a futures contract and/or enter into an offsetting closing transaction, the Fund would continue to be subject to market riskwith respect to the value of the contracts and continue to be required to maintain the margin deposits on the futures contracts. Futures contractshave minimal Counterparty risk since the exchange’s clearinghouse, as Counterparty to all exchange-traded futures, guarantees the futuresagainst default. Risks may exceed amounts recognized in the Consolidated Statement of Assets and Liabilities.

M. Swap Agreements — The Fund may enter into various swap transactions, including interest rate, total return, index, currency, commodity andcredit default swap contracts (“CDS”) for investment purposes or to manage interest rate, currency or credit risk. Such transactions areagreements between Counterparties. These agreements may contain among other conditions, events of default and termination events, andvarious covenants and representations such as provisions that require the Fund to maintain a pre-determined level of net assets, and/or providelimits regarding the decline of the Fund’s NAV over specific periods of time. If the Fund were to trigger such provisions and have open derivativepositions at that time, the Counterparty may be able to terminate such agreement and request immediate payment in an amount equal to the netliability positions, if any.

Interest rate, total return, index, and currency swap agreements are two-party contracts entered into primarily to exchange the returns (ordifferentials in rates of returns) earned or realized on particular predetermined investments or instruments. The gross returns to be exchanged or“swapped” between the parties are calculated with respect to a notional amount, i.e., the return on or increase in value of a particular dollaramount invested at a particular interest rate or return of an underlying asset, in a particular foreign currency, or in a “basket” of securitiesrepresenting a particular index.

An interest rate swap is an agreement between Counterparties pursuant to which the parties exchange a floating rate payment for a fixed ratepayment based on a specified notional amount.

A total return swap is an agreement in which one party makes payments based on a set rate, either fixed or variable, while the other partymakes payments based on the return of an underlying asset, which includes both the income generated and capital gains, if any. The unrealizedappreciation (depreciation) on total return swaps includes dividends on the underlying securities and financing rate payable from theCounterparty. At the maturity date, a net cash flow is exchanged where the total return is equivalent to the return of the underlying reference lessa financing rate, if any. As a receiver, the Fund would receive payments based on any positive total return and would owe payments in the eventof a negative total return. As the payer, the Fund would owe payments on any net positive total return, and would receive payment in the event ofa negative total return.

Changes in the value of swap agreements are recognized as unrealized gains (losses) in the Consolidated Statement of Operations by “markingto market” on a daily basis to reflect the value of the swap agreement at the end of each trading day. Payments received or paid at the beginningof the agreement are reflected as such on the Consolidated Statement of Assets and Liabilities and may be referred to as upfront payments. TheFund accrues for the fixed payment stream and amortizes upfront payments, if any, on swap agreements on a daily basis with the net amount,recorded as a component of realized gain (loss) on the Consolidated Statement of Operations. A liquidation payment received or made at thetermination of a swap agreement is recorded as realized gain (loss) on the Consolidated Statement of Operations. The Fund segregates cash orliquid securities having a value at least equal to the amount of the potential obligation of a Fund under any swap transaction. Cash held ascollateral is recorded as deposits with brokers on the Consolidated Statement of Assets and Liabilities. Entering into these agreements involves,to varying degrees, lack of liquidity and elements of credit, market, and Counterparty risk in excess of amounts recognized on the ConsolidatedStatement of Assets and Liabilities. Such risks involve the possibility that a swap is difficult to sell or liquidate; the Counterparty does not honorits obligations under the agreement and unfavorable interest rates and market fluctuations. It is possible that developments in the swaps market,including potential government regulation, could adversely affect the Fund’s ability to terminate existing swap agreements or to realize amountsto be received under such agreements. A short position in a security poses more risk than holding the same security long. As there is no limit onhow much the price of the security can increase, the Fund’s exposure is unlimited.


N. Leverage Risk — Leverage exists when the Fund can lose more than it originally invests because it purchases or sells an instrument or entersinto a transaction without investing an amount equal to the full economic exposure of the instrument or transaction.

O. Other Risks — The Fund will seek to gain exposure to commodity markets primarily through an investment in the Subsidiary and throughinvestments in exchange-traded funds and commodity-linked derivatives. The Subsidiary, unlike the Fund, may invest without limitation incommodities, commodity-linked derivatives and other securities, such as exchange-traded and commodity-linked notes, that may provideleveraged and non-leveraged exposure to commodity markets. The Fund is indirectly exposed to the risks associated with the Subsidiary’sinvestments.

P. Collateral — To the extent the Fund has designated or segregated a security as collateral and that security is subsequently sold, it is the Fund’spractice to replace such collateral no later than the next business day.

NOTE 2—Advisory Fees and Other Fees Paid to Affiliates

The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of theinvestment advisory agreement, the Fund accrues daily and pays monthly an advisory fee to the Adviser less the amount paid by the Subsidiary to theAdviser based on the annual rate of the Fund’s average daily net assets as follows:

Average Daily Net Assets Rate

First $250 million 0.95%

Next $250 million 0.925%

Next $500 million 0.90%

Next $1.5 billion 0.875%




Over $10 billion 0.775%

For the year ended December 31, 2017, the effective advisory fees incurred by the Fund was 0.91%.The Subsidiary has entered into a separate contract with the Adviser whereby the Adviser provides investment advisory and other services to the

Subsidiary. In consideration of these services, the Subsidiary pays an advisory fee to the Adviser based on the annual rate of the Subsidiary’s averagedaily net assets as set forth in the table above.

Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, InvescoAsset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. andInvesco Canada Ltd. and separate sub-advisory agreements with Invesco PowerShares Capital Management LLC and Invesco Asset Management (India)Private Limited (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any suchAffiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated tosuch Affiliated Sub-Adviser(s).

The Adviser has contractually agreed, through at least April 30, 2019, to waive advisory fees and/or reimburse expenses of shares to the extentnecessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (including prior fiscal year-end Acquired FundFees and Expenses of 0.13% and excluding certain items discussed below) of Series I shares to 0.80% and Series II shares to 1.05% of averagedaily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the followingexpenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement toexceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, includinglitigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Acquired FundFees and Expenses are not operating expenses of the Fund directly, but are fees and expenses, including management fees, of the investmentcompanies in which the Fund invests. As a result, the total annual fund operating expenses after expense reimbursement may exceed the expenselimits above. Unless Invesco continues the fee waiver agreement, it will terminate on April 30, 2019. During its term, the fee waiver agreementcannot be terminated or amended to increase the expense limits or reduce the advisory fee waiver without approval of the Board of Trustees.

Further, the Adviser has contractually agreed, through at least June 30, 2019, to waive the advisory fee payable by the Fund in an amount equalto 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in suchaffiliated money market funds.

For the year ended December 31, 2017, the Adviser waived advisory fees of $5,103,040.The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for

costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurancecompanies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurancecompanies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase andredemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variableproduct owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, andresponding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2017, Invescowas paid $277,985 for accounting and fund administrative services and was reimbursed $1,779,710 for fees paid to insurance companies.


The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund hasagreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in thecourse of providing such services. For the year ended December 31, 2017, expenses incurred under the agreement are shown in the ConsolidatedStatement of Operations as Transfer agent fees.

The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trusthas adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to thePlan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paidmonthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnishcontinuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2017,expenses incurred under the Plan are detailed in the Consolidated Statement of Operations as Distribution fees.

Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.

NOTE 3—Additional Valuation Information

GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between marketparticipants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods,giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority tosignificant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, thesecurities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’sassigned level:

Level 1 — Prices are determined using quoted prices in an active market for identical assets.Level 2 — Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in

pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves,loss severities, default rates, discount rates, volatilities and others.

Level 3 — Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (forexample, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used.Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of thesecurities or instruments and would be based on the best available information.

The following is a summary of the tiered valuation input levels, as of December 31, 2017. The level assigned to the securities valuations may notbe an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the valuesreflected in the consolidated financial statements may materially differ from the value received upon actual sale of those investments.

The Fund’s policy is to recognize transfers in and out of the valuation levels as of the end of the reporting period. During the year endedDecember 31, 2017, there were no material transfers between valuation levels.

Level 1 Level 2 Level 3 Total

Investments in Securities

U.S. Treasury Securities $ — $131,303,781 $— $ 131,303,781

Commodity Linked Securities — 23,918,960 — 23,918,960

Money Market Funds 1,004,893,828 — — 1,004,893,828

Total Investments in Securities 1,004,893,828 155,222,741 — 1,160,116,569

Other Investments – Assets*

Futures Contracts 15,419,756 — — 15,419,756

Swap Agreements — 8,191,193 — 8,191,193

15,419,756 8,191,193 — 23,610,949

Other Investments – Liabilities*

Futures Contracts (7,591,168) — — (7,591,168)

Swap Agreements — (74,084) — (74,084)

(7,591,168) (74,084) — (7,665,252)

Total Other Investments 7,828,588 8,117,109 — 15,945,697

Total Investments $1,012,722,416 $163,339,850 $— $1,176,062,266

* Unrealized appreciation (depreciation).

NOTE 4—Derivative Investments

The Fund may enter into an International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) under which a fund maytrade OTC derivatives. An OTC transaction entered into under an ISDA Master Agreement typically involves a collateral posting arrangement, paymentnetting provisions and close-out netting provisions. These netting provisions allow for reduction of credit risk through netting of contractualobligations. The enforceability of the netting provisions of the ISDA Master Agreement depends on the governing law of the ISDA Master Agreement,among other factors.

For financial reporting purposes, the Fund does not offset OTC derivative assets or liabilities that are subject to ISDA Master Agreements in theConsolidated Statement of Assets and Liabilities.


Value of Derivative Investments at Period-End

The table below summarizes the value of the Fund’s derivative investments, detailed by primary risk exposure, held as of December 31, 2017:

Value

Derivative AssetsCommodity

Risk Equity RiskInterest Rate

Risk Total

Unrealized appreciation on futures contracts — Exchange-Traded(a) $ 5,969,784 $ 8,595,430 $ 854,542 $ 15,419,756

Unrealized appreciation on swap agreements — OTC 7,857,477 333,716 — 8,191,193

Total Derivative Assets 13,827,261 8,929,146 854,542 23,610,949

Derivatives not subject to master netting agreements (5,969,784) (8,595,430) (854,542) (15,419,756)

Total Derivative Assets subject to master netting agreements $ 7,857,477 $ 333,716 $ — $ 8,191,193

Value

Derivative LiabilitiesCommodity

Risk Equity RiskInterest Rate

Risk Total

Unrealized depreciation on futures contracts — Exchange-Traded(a) $ (96,852) $(2,208,417) $(5,285,899) $ (7,591,168)

Unrealized depreciation on swap agreements — OTC — — (74,084) (74,084)

Total Derivative Liabilities (96,852) (2,208,417) (5,359,983) (7,665,252)

Derivatives not subject to master netting agreements 96,852 2,208,417 5,285,899 7,591,168

Total Derivative Liabilities subject to master netting agreements $ — $ — $ (74,084) $ (74,084)

(a) The daily variation margin receivable at period-end is recorded in the Consolidated Statement of Assets and Liabilities.

Offsetting Assets and Liabilities

The table below reflects the Fund’s exposure to Counterparties subject to either an ISDA Master Agreement or other agreement for OTC derivativetransactions as of December 31, 2017.

FinancialDerivative

Assets

FinancialDerivativeLiabilities

Net Value ofDerivatives

Collateral(Received)/Pledged Net

Amount(b)CounterpartySwap

AgreementsSwap

Agreements Non-Cash Cash

FundGoldman Sachs International $ 333,716 $(111,592) $ 222,124 $— $ — $ 222,124

Macquarie Bank Ltd. — (75,025) (75,025) — — (75,025)

Subtotal — Fund 333,716 (186,617) 147,099 — — 147,099

Subsidiary

Barclays Bank PLC 1,933,173 (12,482) 1,920,691 — — 1,920,691

Cargill, Inc. 311,754 (24,698) 287,056 — — 287,056

Canadian Imperial Bank of Commerce 2,638,807 (24,193) 2,614,614 — — 2,614,614

Goldman Sachs International 114,705 (8,981) 105,724 — — 105,724

J.P. Morgan Chase Bank, N.A. 898,584 (1,280) 897,304 — — 897,304

Macquarie Bank Ltd. 832,704 (1,164) 831,540 — (260,000) 571,540

Merrill Lynch International 811,294 (421,104) 390,190 — — 390,190

Morgan Stanley Capital Services LLC 1,449,522 (2,473) 1,447,049 — (1,340,000) 107,049

Subtotal — Subsidiary $8,990,543 $(496,375) $8,494,168 $— $(1,600,000) $6,894,168

Total $9,324,259 $(682,992) $8,641,267 $— $(1,600,000) $7,041,267

(b) The Fund and the Subsidiary are recognized as separate legal entities and as such are subject to separate netting arrangements with the Counterparty.


Effect of Derivative Investments for the year ended December 31, 2017

The table below summarizes the gains (losses) on derivative investments, detailed by primary risk exposure, recognized in earnings during the period:

Location of Gain (Loss) onConsolidated Statement of Operations

CommodityRisk Equity Risk

Interest RateRisk Total

Realized Gain (Loss):Futures contracts $ 3,485,053 $82,408,649 $13,270,214 $ 99,163,916

Swap agreements 3,059,735 6,764,613 (667,356) 9,156,992

Change in Net Unrealized Appreciation (Depreciation):Futures contracts 3,100,499 (269,988) (5,000,510) (2,169,999)

Swap agreements 9,714,697 55,671 (74,084) 9,696,284

Total $19,359,984 $88,958,945 $ 7,528,264 $115,847,193

The table below summarizes the average notional value of futures contracts and swap agreements outstanding during the period.

FuturesContracts

SwapAgreements

Average notional value $1,356,016,346 $278,427,349

NOTE 5—Trustees’ and Officers’ Fees and Benefits

Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund.Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by theFund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in whichtheir deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that providedfor benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain formerTrustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amountsaccrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claimsagainst the general assets of the Fund.

NOTE 6—Cash Balances

The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company, the custodianbank. Such balances, if any at period-end, are shown in the Consolidated Statement of Assets and Liabilities under the payable caption Amount duecustodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in theaccount so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rateagreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.

NOTE 7—Distributions to Shareholders and Tax Components of Net Assets

Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2017 and 2016:

2017 2016

Ordinary income $ 72,920,240 $2,106,720

Long-term capital gain 37,008,399 —

Total distributions $109,928,639 $2,106,720

Tax Components of Net Assets at Period-End:

2017

Undistributed ordinary income $ 82,771,063

Undistributed long-term gain 26,864,066

Net unrealized appreciation (depreciation) — investments (245,481)

Net unrealized appreciation — foreign currencies 48

Temporary book/tax differences (103,983)

Shares of beneficial interest 1,088,131,232

Total net assets $1,197,416,945

The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gainsand losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily tofutures contracts and swap agreements.


The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’stemporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.

Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect theamount of capital loss carryforward actually available for the Fund to utilize. Capital losses generated in years beginning after December 22, 2010can be carried forward for an unlimited period, whereas previous losses expire in eight tax years. Capital losses with an expiration period may not beused to offset capital gains until all net capital losses without an expiration date have been utilized. Capital loss carryforwards with no expiration datewill retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. The ability toutilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of futuretransactions.

The Fund does not have a capital loss carryforward as of December 31, 2017.

NOTE 8—Investment Transactions

The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any)purchased and sold by the Fund during the year ended December 31, 2017 was $23,900,000 and $20,590,483, respectively. During the sameperiod, sales of U.S. Treasury obligations were $42,675,466. Cost of investments, including any derivatives, on a tax basis includes the adjustmentsfor financial reporting purposes as of the most recently completed federal income tax reporting period-end.

Unrealized Appreciation (Depreciation) of Investments on a Tax Basis

Aggregate unrealized appreciation of investments $ 56,710,161

Aggregate unrealized (depreciation) of investments (56,955,642)

Net unrealized appreciation (depreciation) of investments $ (245,481)

Cost of investments for tax purposes is $1,176,307,747.

NOTE 9—Reclassification of Permanent Differences

Primarily as a result of differing book/tax treatment of swap agreement income and futures contracts, on December 31, 2017, undistributed netinvestment income was increased by $6,622,562, undistributed net realized gain was decreased by $6,539,825 and shares of beneficial interestwas decreased by $82,737. This reclassification had no effect on the net assets of the Fund.

NOTE 10—Share Information

Summary of Share ActivityYears ended December 31,

2017(a) 2016

Shares Amount Shares Amount

Sold:

Series I 353,444 $ 4,089,594 2,079,260 $ 23,038,972

Series II 11,147,285 127,157,678 20,137,979 220,328,126

Issued as reinvestment of dividends:

Series I 330,067 3,554,824 12,271 141,114

Series II 9,988,152 106,373,815 172,876 1,965,605

Reacquired:

Series I (264,404) (3,038,309) (1,664,871) (18,448,956)

Series II (16,688,062) (189,658,705) (14,209,711) (152,058,612)

Net increase in share activity 4,866,482 $ 48,478,897 6,527,804 $ 74,966,249

(a) There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 83% of the outstanding shares of theFund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units ofinterest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to theseentities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to servicessuch as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or anyportion of the shares owned of record by these entities are also owned beneficially.


NOTE 11—Financial Highlights

The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.

Net assetvalue,

beginningof period

Netinvestment

income(loss)(a)

Net gains(losses)

on securities(both

realized andunrealized)

Total frominvestmentoperations

Dividendsfrom net

investmentincome

Distributionsfrom netrealized

gainsTotal

distributions

Net assetvalue, endof period

Totalreturn(b)

Net assets,end of period

(000’s omitted)

Ratio ofexpenses

to averagenet assets

with fee waiversand/or expenses

absorbed

Ratio ofexpenses

to average netassets without

fee waiversand/or expenses

absorbed

Ratio of netinvestment

income (loss)to averagenet assets

Portfolioturnover(c)

Series IYear ended 12/31/17 $11.35 $ 0.01 $ 1.08 $ 1.09 $(0.48) $(0.65) $(1.13) $11.31 10.06% $ 39,340 0.68%(d)(e) 1.11%(d) 0.10%(d) 52%Year ended 12/31/16 10.20 (0.04) 1.24 1.20 (0.05) — (0.05) 11.35 11.74 34,714 0.67(e) 1.12 (0.33) 120Year ended 12/31/15 12.30 (0.07) (0.44) (0.51) (0.52) (1.07) (1.59) 10.20 (4.10) 26,854 0.69 1.15 (0.61) 44Year ended 12/31/14 12.30 (0.08) 0.80 0.72 — (0.72) (0.72) 12.30 5.91 11,397 0.69(e) 1.11 (0.65) 60Year ended 12/31/13 12.65 (0.08) 0.30 0.22 (0.21) (0.36) (0.57) 12.30 1.70 8,821 0.70 1.11 (0.65) 76

Series IIYear ended 12/31/17 11.22 (0.02) 1.07 1.05 (0.45) (0.65) (1.10) 11.17 9.83 1,158,077 0.93(d)(e) 1.36(d) (0.15)(d) 52Year ended 12/31/16 10.08 (0.06) 1.22 1.16 (0.02) — (0.02) 11.22 11.51 1,113,539 0.92(e) 1.37 (0.58) 120Year ended 12/31/15 12.17 (0.10) (0.44) (0.54) (0.48) (1.07) (1.55) 10.08 (4.40) 939,354 0.94 1.40 (0.86) 44Year ended 12/31/14 12.21 (0.12) 0.80 0.68 — (0.72) (0.72) 12.17 5.62 1,002,835 0.94(e) 1.36 (0.90) 60Year ended 12/31/13 12.57 (0.11) 0.30 0.19 (0.19) (0.36) (0.55) 12.21 1.50 1,369,485 0.95 1.36 (0.90) 76

(a) Calculated using average shares outstanding.(b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and

the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Total returns are not annualized for periods less than oneyear, if applicable and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns.

(c) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable.(d) Ratios are based on average daily net assets (000’s omitted) of $36,709 and $1,150,181 for Series I and Series II shares, respectively.(e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests.

Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly bythe Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying fundsand are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund’s total return.Estimated acquired fund fees from underlying funds were 0.15%, 0.13% and 0.09% for the year ended December 31, 2017, 2016 and 2014, respectively.


Report of Independent Registered Public Accounting Firm

To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds)and Shareholders of Invesco V.I. Balanced-Risk Allocation Fund

Opinion on the Financial Statements

We have audited the accompanying consolidated statement of assets and liabilities, including the consolidated schedule of investments,of Invesco V.I. Balanced-Risk Allocation Fund and its subsidiary (one of the funds constituting AIM Variable Insurance Funds (InvescoVariable Insurance Funds), hereafter collectively referred to as the “Fund”) as of December 31, 2017, the related consolidatedstatement of operations for the year ended December 31, 2017, the consolidated statement of changes in net assets for each of thetwo years in the period ended December 31, 2017, including the related notes, and the financial highlights for each of the five years inthe period ended December 31, 2017 (collectively referred to as the “financial statements”). In our opinion, the financial statementspresent fairly, in all material respects, the financial position of the Fund as of December 31, 2017, the results of their operations forthe year then ended, the changes in their net assets for each of the two years in the period ended December 31, 2017 and the financialhighlights for each of the five years in the period ended December 31, 2017 in conformity with accounting principles generallyaccepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’sfinancial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting OversightBoard (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance with the U.S. federalsecurities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that weplan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement,whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to erroror fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidenceregarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles usedand significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Ourprocedures included confirmation of securities owned as of December 31, 2017 by correspondence with the custodian, transfer agentand brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide areasonable basis for our opinion.

PricewaterhouseCoopers LLP

Houston, TXFebruary 14, 2018

We have served as the auditor of one or more of the investment companies in the Invesco/PowerShares group of investment companiessince at least 1995. We have not determined the specific year we began serving as auditor.


Calculating your ongoing Fund expenses

Example

As a shareholder of the Fund, you incur ongoing costs, including management fees; distribution and/or service fees (12b-1); and other Fundexpenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs withongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and heldfor the entire period July 1, 2017 through December 31, 2017.

The actual and hypothetical expenses in the examples below do not represent the effect of any fees or other expenses assessed in connection witha variable product; if they did, the expenses shown would be higher while the ending account values shown would be lower.

Actual expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, together with theamount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an$8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual ExpensesPaid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical example for comparison purposes

The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio andan assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.

The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. Youmay use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example withthe 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs. Therefore, the hypothetical information is useful incomparing ongoing costs, and will not help you determine the relative total costs of owning different funds.

Class

BeginningAccount Value(07/01/17)

ACTUAL

HYPOTHETICAL(5% annual return before

expenses)

AnnualizedExpense

Ratio

EndingAccount Value(12/31/17)1

ExpensesPaid During

Period2

EndingAccount Value(12/31/17)

ExpensesPaid During

Period2

Series I $1,000.00 $1,077.80 $3.56 $1,021.78 $3.47 0.68%

Series II 1,000.00 1,077.20 4.87 1,020.52 4.74 0.931 The actual ending account value is based on the actual total return of the Fund for the period July 1, 2017 through December 31, 2017, after actual expenses and will differ from the

hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses.2 Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent

fiscal half year.


Tax Information

Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included intheir tax returns. Shareholders should consult their tax advisors.

The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended

December 31, 2017:

Federal and State Income TaxLong-Term Capital Gain Distributions $37,008,399Corporate Dividends Received Deduction* 0.00%U.S. Treasury Obligations* 4.43%

* The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.


Trustees and OfficersThe address of each trustee and officer is AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”), 11 Greenway Plaza,Suite 1000, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation,retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until theirsuccessors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.

Name, Year of Birth andPosition(s) Held with the Trust

Trustee and/or Officer Since

Principal Occupation(s)During Past 5 Years

Number ofFunds in FundComplexOverseen byTrustee

Other Directorship(s)Held by Trustee DuringPast 5 Years

Interested Persons

Martin L. Flanagan1 — 1960Trustee

2007 Executive Director, Chief Executive Officer and President, Invesco Ltd.(ultimate parent of Invesco and a global investment management firm);Trustee, The Invesco Funds; Vice Chair, Investment Company Institute; andMember of Executive Board, SMU Cox School of BusinessFormerly: Advisor to the Board, Invesco Advisers, Inc. (formerly known asInvesco Institutional (N.A.), Inc.); Chairman and Chief Executive Officer,Invesco Advisers, Inc. (registered investment adviser); Director, Chairman,Chief Executive Officer and President, Invesco Holding Company (US), Inc.(formerly IVZ Inc.) (holding company), Invesco Group Services, Inc. (serviceprovider) and Invesco North American Holdings, Inc. (holding company);Director, Chief Executive Officer and President, Invesco Holding CompanyLimited (parent of Invesco and a global investment management firm);Director, Invesco Ltd.; Chairman, Investment Company Institute andPresident, Co-Chief Executive Officer, Co-President, Chief Operating Officerand Chief Financial Officer, Franklin Resources, Inc. (global investmentmanagement organization)

158 None

Philip A. Taylor2 — 1954Trustee and Senior Vice President

2006 Head of the Americas and Senior Managing Director, Invesco Ltd.; Director,Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.)(registered investment adviser); Director, Chairman, Chief Executive Officerand President, Invesco Management Group, Inc. (formerly known as InvescoAim Management Group, Inc.) (financial services holding company); Directorand Chairman, Invesco Investment Services, Inc. (formerly known as InvescoAim Investment Services, Inc.) (registered transfer agent); Chief ExecutiveOfficer, Invesco Corporate Class Inc. (corporate mutual fund company);Director, Chairman and Chief Executive Officer, Invesco Canada Ltd. (formerlyknown as Invesco Trimark Ltd./Invesco Trimark Ltèe) (registered investmentadviser and registered transfer agent); Trustee and Senior Vice President, TheInvesco Funds; Director, Invesco Investment Advisers LLC (formerly known asVan Kampen Asset Management).Formerly: Co-Chairman, Co-President and Co-Chief Executive Officer, InvescoAdvisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registeredinvestment adviser); Director, Chief Executive Officer and President, VanKampen Exchange Corp; President and Principal Executive Officer, The InvescoFunds (other than AIM Treasurer’s Series Trust (Invesco Treasurer’s SeriesTrust), Short-Term Investments Trust and Invesco Management Trust);Executive Vice President, The Invesco Funds (AIM Treasurer’s Series Trust(Invesco Treasurer’s Series Trust), Short-Term Investments Trust and InvescoManagement Trust only); Director and President, INVESCO Funds Group, Inc.(registered investment adviser and registered transfer agent); Director andChairman, IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.)(registered broker dealer); Director, President and Chairman, Invesco Inc.(holding company), Invesco Canada Holdings Inc. (holding company), TrimarkInvestments Ltd./Placements Trimark Ltèe and Invesco Financial Services Ltd/Services Financiers Invesco Ltèe; Chief Executive Officer, Invesco Canada FundInc. (corporate mutual fund company); Director and Chairman, Van KampenInvestor Services Inc.; Director, Chief Executive Officer and President, 1371Preferred Inc. (holding company) and Van Kampen Investments Inc.; Directorand President, AIM GP Canada Inc. (general partner for limited partnerships)and Van Kampen Advisors, Inc.; Director and Chief Executive Officer, InvescoTrimark Dealer Inc. (registered broker dealer); Director, Invesco Distributors,Inc. (formerly known as Invesco Aim Distributors, Inc.) (registered brokerdealer); Manager, Invesco PowerShares Capital Management LLC; Director,Chief Executive Officer and President, Invesco Advisers, Inc.; Director,Chairman, Chief Executive Officer and President, Invesco Aim CapitalManagement, Inc.; President, Invesco Trimark Dealer Inc. and Invesco TrimarkLtd./Invesco Trimark Ltèe; Director and President, AIM Trimark CorporateClass Inc. and AIM Trimark Canada Fund Inc.; Senior Managing Director,Invesco Holding Company Limited; Director and Chairman, Fund ManagementCompany (former registered broker dealer); President and Principal ExecutiveOfficer, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’sSeries Trust), and Short-Term Investments Trust only); President, AIM TrimarkGlobal Fund Inc. and AIM Trimark Canada Fund Inc.

158 None

1 Mr. Flanagan is considered an interested person (within the meaning of Section 2(a)(19) of the 1940 Act) of the Trust because he is an officer of the Adviser to the Trust, and an officerand a director of Invesco Ltd., ultimate parent of the Adviser.

2 Mr. Taylor is considered an interested person (within the meaning of Section 2(a)(19) of the 1940 Act) of the Trust because he is an officer and a director of the Adviser.


Trustees and Officers—(continued)






Independent Trustees

Bruce L. Crockett — 1944Trustee and Chair

1993 Chairman, Crockett Technologies Associates (technology consultingcompany)Formerly: Director, Captaris (unified messaging provider); Director,President and Chief Executive Officer, COMSAT Corporation; Chairman, Boardof Governors of INTELSAT (international communications company); ACELimited (insurance company); Independent Directors Council and InvestmentCompany Institute: Member of the Audit Committee, Investment CompanyInstitute; Member of the Executive Committee and Chair of the GovernanceCommittee, Independent Directors Council

158 Director and Chairman ofthe Audit Committee, ALPS(Attorneys LiabilityProtection Society)(insurance company);Director and Member of theAudit Committee andCompensation Committee,Ferroglobe PLC(metallurgical company)

David C. Arch — 1945Trustee

2010 Chairman of Blistex Inc. (consumer health care products manufacturer);Member, World Presidents’ Organization

158 Board member of theIllinois Manufacturers’Association

Jack M. Fields — 1952Trustee

1997 Chief Executive Officer, Twenty First Century Group, Inc. (government affairscompany); and Chairman, Discovery Learning Alliance (non-profit)Formerly: Owner and Chief Executive Officer, Dos Angeles Ranch L.P. (cattle,hunting, corporate entertainment); Director, Insperity, Inc. (formerly knownas Administaff) (human resources provider); Chief Executive Officer, TexanaTimber LP (sustainable forestry company); Director of Cross Timbers QuailResearch Ranch (non-profit); and member of the U.S. House ofRepresentatives

158 None

Cynthia Hostetler — 1962Trustee

2017 Non-Executive Director and Trustee of a number of public and privatebusiness corporationsFormerly: Head of Investment Funds and Private Equity, Overseas PrivateInvestment Corporation; President, First Manhattan Bancorporation, Inc.;Attorney, Simpson Thacher & Bartlett LLP

158 Vulcan Materials Company(construction materialscompany); Trilinc GlobalImpact Fund; AberdeenInvestment Funds(4 portfolios); Artio GlobalInvestment LLC (mutualfund complex); EdgenGroup, Inc. (specializedenergy and infrastructureproducts distributor)

Eli Jones — 1961Trustee

2016 Professor and Dean, Mays Business School — Texas A&M UniversityFormerly: Professor and Dean, Walton College of Business, University ofArkansas and E.J. Ourso College of Business, Louisiana State University;Director, Arvest Bank

158 Insperity, Inc. (formerlyknown as Administaff)(human resources provider)

Prema Mathai-Davis — 1950Trustee

1998 Retired. 158 None

Teresa M. Ressel — 1962Trustee

2017 Non-executive director and trustee of a number of public and privatebusiness corporationsFormerly: Chief Financial Officer, Olayan America, The Olayan Group(international investor/commercial/industrial); Chief Executive Officer, UBSSecurities LLC; Group Chief Operating Officer, Americas, UBS AG; AssistantSecretary for Management & Budget and CFO, US Department of the Treasury

158 Atlantic Power Corporation(power generationcompany); ONSemiconductor Corp.(semiconductor supplier)

Ann Barnett Stern — 1957Trustee

2017 President and Chief Executive Officer, Houston Endowment Inc. (privatephilanthropic institution)Formerly: Executive Vice President and General Counsel, Texas Children’sHospital; Attorney, Beck, Redden and Secrest, LLP; Business Law Instructor,University of St. Thomas; Attorney, Andrews & Kurth LLP

158 Federal Reserve Bank ofDallas

Raymond Stickel, Jr. — 1944Trustee

2005 Retired.Formerly: Director, Mainstay VP Series Funds, Inc. (25 portfolios); Partner,Deloitte & Touche

158 None

Robert C. Troccoli — 1949Trustee

2016 Adjunct Professor, University of Denver — Daniels College of BusinessFormerly: Senior Partner, KPMG LLP

158 None

Christopher L. Wilson — 1957Trustee

2017 Non-executive director and trustee of a number of public and privatebusiness corporationsFormerly: Managing Partner, CT2, LLC (investing and consulting firm);President/Chief Executive Officer, Columbia Funds, Bank of AmericaCorporation; President/Chief Executive Officer, CDC IXIS Asset ManagementServices, Inc.; Principal & Director of Operations, Scudder Funds, Scudder,Stevens & Clark, Inc.; Assistant Vice President, Fidelity Investments

158 TD Asset Management USAInc. (mutual fund complex)(22 portfolios); ISO NewEngland, Inc. (non-profitorganization managingregional electricity market)








Other Officers

Sheri Morris — 1964President, Principal ExecutiveOfficer and Treasurer

1999 President, Principal Executive Officer and Treasurer, The Invesco Funds; VicePresident, Invesco Advisers, Inc. (formerly known as Invesco Institutional(N.A.), Inc.) (registered investment adviser); and Vice President,PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-TradedFund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerSharesActively Managed Exchange-Traded Fund Trust, PowerShares ActivelyManaged Exchange-Traded Commodity Fund Trust and PowerSharesExchange-Traded Self-Indexed Fund TrustFormerly: Vice President and Principal Financial Officer, The Invesco Funds;Vice President, Invesco Aim Advisers, Inc., Invesco Aim Capital Management,Inc. and Invesco Aim Private Asset Management, Inc.; Assistant VicePresident and Assistant Treasurer, The Invesco Funds and Assistant VicePresident, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. andInvesco Aim Private Asset Management, Inc.; and Treasurer, PowerSharesExchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II,PowerShares India Exchange-Traded Fund Trust and PowerShares ActivelyManaged Exchange-Traded Fund Trust

N/A N/A

Russell C. Burk — 1958Senior Vice President and SeniorOfficer

2005 Senior Vice President and Senior Officer, The Invesco Funds N/A N/A

John M. Zerr — 1962Senior Vice President, ChiefLegal Officer and Secretary

2006 Director, Senior Vice President, Secretary and General Counsel, InvescoManagement Group, Inc. (formerly known as Invesco AIM Management Group,Inc.); Senior Vice President, Invesco Advisers, Inc. (formerly known asInvesco Institutional (N.A.), Inc.) (registered investment adviser); Senior VicePresident and Secretary, Invesco Distributors, Inc. (formerly known asInvesco AIM Distributors, Inc.); Director, Vice President and Secretary,Invesco Investment Services, Inc. (formerly known as Invesco AIM InvestmentServices, Inc.) Senior Vice President, Chief Legal Officer and Secretary, TheInvesco Funds; Managing Director, Invesco PowerShares Capital ManagementLLC; Director, Secretary and General Counsel, Invesco Investment AdvisersLLC (formerly known as Van Kampen Asset Management); Secretary andGeneral Counsel, Invesco Capital Markets, Inc. (formerly known as VanKampen Funds Inc.) and Chief Legal Officer, PowerShares Exchange-TradedFund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares IndiaExchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-TradedCommodity Fund Trust and PowerShares Exchange-Traded Self-Indexed FundTrust; Manager and Secretary, Invesco Indexing LLCFormerly: Director, Secretary, General Counsel and Senior Vice President,Van Kampen Exchange Corp.; Director, Vice President and Secretary, IVZDistributors, Inc. (formerly known as INVESCO Distributors, Inc.); Directorand Vice President, INVESCO Funds Group, Inc.; Director and Vice President,Van Kampen Advisors Inc.; Director, Vice President, Secretary and GeneralCounsel, Van Kampen Investor Services Inc.; Director, Invesco Distributors,Inc. (formerly known as Invesco AIM Distributors, Inc.); Director, Senior VicePresident, General Counsel and Secretary, Invesco AIM Advisers, Inc. and VanKampen Investments Inc.; Director, Vice President and Secretary, FundManagement Company; Director, Senior Vice President, Secretary, GeneralCounsel and Vice President, Invesco AIM Capital Management, Inc.; ChiefOperating Officer and General Counsel, Liberty Ridge Capital, Inc. (aninvestment adviser); Vice President and Secretary, PBHG Funds (aninvestment company) and PBHG Insurance Series Fund (an investmentcompany); Chief Operating Officer, General Counsel and Secretary, OldMutual Investment Partners (a broker-dealer); General Counsel andSecretary, Old Mutual Fund Services (an administrator) and Old MutualShareholder Services (a shareholder servicing center); Executive VicePresident, General Counsel and Secretary, Old Mutual Capital, Inc. (aninvestment adviser); and Vice President and Secretary, Old Mutual AdvisorsFunds (an investment company)

N/A N/A

Gregory G. McGreevey — 1962Senior Vice President

2012 Senior Managing Director, Invesco Ltd.; Director, Chairman, President, andChief Executive Officer, Invesco Advisers, Inc. (formerly known as InvescoInstitutional (N.A.), Inc.) (registered investment adviser); Senior VicePresident, Invesco Management Group, Inc.; Director, Invesco MortgageCapital, Inc. and Invesco Senior Secured Management, Inc.; and Senior VicePresident, The Invesco FundsFormerly: Assistant Vice President, The Invesco Funds

N/A N/A

Kelli Gallegos — 1970Vice President, Principal FinancialOfficer and Assistant Treasurer

2008 Vice President, Principal Financial Officer and Assistant Treasurer, TheInvesco Funds; Assistant Treasurer, Invesco PowerShares CapitalManagement LLC, PowerShares Exchange-Traded Fund Trust, PowerSharesExchange-Traded Fund Trust II, PowerShares India Exchange-Traded FundTrust, PowerShares Actively Managed Exchange-Traded Fund Trust,PowerShares Actively Managed Exchange-Traded Commodity Fund Trust andPowerShares Exchange-Traded Self-Indexed Fund TrustFormerly: Assistant Vice President, The Invesco Funds

N/A N/A








Other Officers—(continued)

Tracy Sullivan — 1962Vice President, Chief Tax Officerand Assistant Treasurer

2008 Vice President, Chief Tax Officer and Assistant Treasurer, The Invesco Funds;Assistant Treasurer, Invesco PowerShares Capital Management LLC,PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-TradedFund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerSharesActively Managed Exchange-Traded Fund Trust, PowerShares ActivelyManaged Exchange-Traded Commodity Fund Trust and PowerSharesExchange-Traded Self-Indexed Fund TrustFormerly: Assistant Vice President, The Invesco Funds

N/A N/A

Crissie M. Wisdom — 1969Anti-Money LaunderingCompliance Officer

2013 Anti-Money Laundering Compliance Officer, Invesco Advisers, Inc. (formerlyknown as Invesco Institutional (N.A.), Inc.) (registered investment adviser),Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.),Invesco Distributors, Inc., Invesco Investment Services, Inc., InvescoManagement Group, Inc., The Invesco Funds, and PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II,PowerShares India Exchange-Traded Fund Trust, PowerShares ActivelyManaged Exchange-Traded Fund Trust, PowerShares Actively ManagedExchange-Traded Commodity Fund Trust and PowerShares Exchange-TradedSelf-Indexed Fund Trust; Anti-Money Laundering Compliance Officer and BankSecrecy Act Officer, INVESCO National Trust Company and Invesco TrustCompany; and Fraud Prevention Manager and Controls and Risk AnalysisManager for Invesco Investment Services, Inc.Formerly: Anti-Money Laundering Compliance Officer, Van Kampen ExchangeCorp.

N/A N/A

Robert R. Leveille — 1969Chief Compliance Officer

2016 Chief Compliance Officer, Invesco Advisers, Inc. (registered investmentadviser); and Chief Compliance Officer, The Invesco FundsFormerly: Chief Compliance Officer, Putnam Investments and the PutnamFunds

N/A N/A

The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246.Please refer to the Fund’s Statement of Additional Information for information on the Fund’s sub-advisers.

Office of the Fund11 Greenway Plaza, Suite 1000Houston, TX 77046-1173

Investment AdviserInvesco Advisers, Inc.1555 Peachtree Street, N.E.Atlanta, GA 30309

DistributorInvesco Distributors, Inc.11 Greenway Plaza, Suite 1000Houston, TX 77046-1173

AuditorsPricewaterhouseCoopers LLP1000 Louisiana Street, Suite 5800Houston, TX 77002-5678

Counsel to the FundStradley Ronon Stevens & Young, LLP2005 Market Street, Suite 2600Philadelphia, PA 19103-7018

Counsel to the Independent TrusteesGoodwin Procter LLP901 New York Avenue, N.W.Washington, D.C. 20001

Transfer AgentInvesco Investment Services, Inc.11 Greenway Plaza, Suite 1000Houston, TX 77046-1173

CustodianState Street Bank and Trust Company225 Franklin StreetBoston, MA 02110-2801


Documents

Invesco V.I. Balanced-Risk Allocation Fund